Earnings Tell The Story For Accelleron Industries AG (VTX:ACLN) As Its Stock Soars 28%

Accelleron Industries AG (VTX:ACLN) shares have continued their recent momentum with a 28% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 63%.

Following the firm bounce in price, Accelleron Industries may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 48.2x, since almost half of all companies in Switzerland have P/E ratios under 20x and even P/E's lower than 15x are not unusual. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

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With earnings growth that's superior to most other companies of late, Accelleron Industries has been doing relatively well. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Accelleron Industries

Keen to find out how analysts think Accelleron Industries' future stacks up against the industry? In that case, our free report is a great place to start.

Is There Enough Growth For Accelleron Industries?

In order to justify its P/E ratio, Accelleron Industries would need to produce outstanding growth well in excess of the market.

If we review the last year of earnings growth, the company posted a terrific increase of 68%. EPS has also lifted 23% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of earnings growth.

Shifting to the future, estimates from the nine analysts covering the company suggest earnings should grow by 17% each year over the next three years. With the market only predicted to deliver 8.7% per annum, the company is positioned for a stronger earnings result.

With this information, we can see why Accelleron Industries is trading at such a high P/E compared to the market. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What We Can Learn From Accelleron Industries' P/E?

The strong share price surge has got Accelleron Industries' P/E rushing to great heights as well. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

As we suspected, our examination of Accelleron Industries' analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Accelleron Industries that you should be aware of.

Of course, you might also be able to find a better stock than Accelleron Industries. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.